Sunday, March 31, 2013
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Sunday, March 24, 2013
What Does Lockheed's F-35 Fighter Jet Really Cost?
What Does Lockheed's F-35 Fighter Jet Really Cost?
http://www.courant.com/business/hc-f-35-price-sidebar-20130318,0,5903951.story
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Boeing touts fighter jet to rival F-35
Boeing touts fighter jet to rival F-35 — at half the price - CBC.ca
http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNH3vVoSjC5GGtJT8F_v7PT5LOnn5Q&url=http://www.cbc.ca/news/politics/story/2013/02/27/pol-fighter-jets-boeing-superhornet-f-35-milewski.html?cmp%3Drss
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http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNH3vVoSjC5GGtJT8F_v7PT5LOnn5Q&url=http://www.cbc.ca/news/politics/story/2013/02/27/pol-fighter-jets-boeing-superhornet-f-35-milewski.html?cmp%3Drss
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Sunday, March 17, 2013
The Most Expensive Fighter Jet Ever Built, by the Numbers
Thanks to the sequester, the Defense Department is now required to cut more than $40 billion this fiscal year out of its $549 billion budget. But one program that's unlikely to take a significant hit is the F-35 Joint Strike Fighter, despite the fact that it's almost four times more expensive than any other Pentagon weapons program that's in the works.
We've compiled some of the most headache-inducing figures, from the program's hefty cost overruns to the billions it's generating in revenue for Lockheed Martin.
Year in which work on the fighter began.
Year in which full-rate production was set to begin.
Year in which full-rate production is now scheduled.
Estimated total cost in 2001.
Current estimated total cost, according to the Washington Post.
Amount already spent on the F-35.
The number of planes originally ordered by the Pentagon in 2001.
The number of planes currently on order. In 2010, the Simpson-Bowles deficit reduction commissionrecommended cutting the number of planes ordered for the Navy and the Air Force by half and scrapping the Marines’ version, which has been plagued by the most problems.
The number of planes that have already been built, even though testing of the fighter is far from complete. And when all the tests are finished, "there will be no yes-or-no, up-or-down decision point," Pierre Sprey, one of the chief architects of the Air Force's older F-16 Fighting Falcon, told the Post. "That's totally deliberate. It was all in the name of ensuring it couldn't be canceled."
The number of planes set to be complete by the time testing is finished in 2018.
$81.7 million
Estimated total cost per plane in 2001.
$162.5 million
Current estimated total cost per plane.
The number of jobs the F-35 currently supports, according to Lockheed Martin.
The number of jobs Lockheed says the fighter will support when full production starts.
The states over which Lockheed and its subcontractors and suppliers have spread the F-35 work.
Amount Lockheed spent on lobbying in 2012, according to OpenSecrets.
Lockheed’s approximate revenue from the F-35 in 2012, according to a recent filing with the Securities and Exchange Commission. While that figure represented 14 percent of the company’s total revenue last year, Lockheed said in the filing that it expects the F-35 “to represent a higher percentage of our sales in future years.”
Amount it could cost to develop, build, fly and maintain all the F-35s on order for 55 years — the lives of the planes — according to Pentagon estimates cited by Bloomberg.
While the F-35 is billions over budget and years behind schedule, the program seems to be doing better recently. A Government Accountability Office report released this week found that Lockheed has made progress in improving supply and manufacturing processes and addressing technical problems.
"We've made enormous progress over the last few years," Steve O'Bryan, Lockheed’s vice president of F-35 business development, told the Washington Post.
The military’s current head of the program, Lt. Gen. Christopher Bogdan, agreed that things have improved but said Lockheed and another major contractor, Pratt & Whitney, still have a ways to go.
“I want them to take on some of the risk of this program,” Bogdan said last month in Australia, which plans to buy 100 of the planes. “I want them to invest in cost reductions. I want them to do the things that will build a better relationship. I’m not getting all that love yet.”
Correction: An earlier version of this post included the estimated total cost of the F-35 program when it began in 2001 ($233 billion) as well as an inflation-adjusted figure calculated in 2013 dollars in parentheses. The $233 billion figure, however, already included projected inflation, so we have removed the inflation-adjusted figure.
Friday, March 15, 2013
TOP NEWS
Insight: Expensive F-35 fighter at risk of budget "death spiral"
Fri, Mar 15 18:53 PM EDT
1 of 4 
By Andrea Shalal-Esa
WASHINGTON (Reuters) - It's called the "death spiral," and America's newest warplane, the F-35 Joint Strike Fighter, is in danger of falling into it before the plane has even gone into service.
The term - recently invoked by top brass involved in the F-35 program - refers to a budgeting Catch-22 that plagues the defense industry. To keep the cost per airplane low, you need to build and sell a lot of planes. But in tough economic times, governments cut orders to save money. That pushes up the cost per plane, leading to more cancellations, pushing up the cost, leading to more cancellations. And so on.
The U.S. military is in the process of making tough decisions due to mandatory budget cuts from sequestration which went into effect March 1 and could lop off $46 billion of Pentagon spending this fiscal year.
Earlier this year, Pentagon budgeteers crunched the numbers on Lockheed Martin Corp's F-35 in an exercise that spoke volumes about the troubles facing the world's most expensive weapons system and the Navy's uncertain commitment to it.
Postponing orders for about 40 of the 260 Navy models of the plane, which will take off from and land on aircraft carriers, would save money in the short-term, according to several defense officials familiar with the analysis, which has not been made public.
But it would also add from $1 billion to $4 billion to the eventual price of the F-35 program, already at a record-setting $396 billion.
Seven years behind schedule and 70 percent over early cost estimates, the stealthy F-35 "Lightning II" appears to have overcome myriad early technical problems only to face a daunting new question: is it affordable in an era of shrinking defense budgets?
According to a congressional watchdog agency, the average price per plane has already almost doubled from $69 million to as much as $137 million since the F-35 program began in 2001. Any further price rise could scare off potential buyers -including vital foreign customers.
"It's a house of cards," said one senior defense official who is familiar with the F-35 program, but was not authorized to speak publicly. "We have finally started improving performance on the program and efficiency in testing, and bang, we get this budget challenge."
Steve O'Bryan, one of Lockheed's top F-35 executives, says the company has already cut F-35 production costs by 50 percent, and is making progress on flight tests and software development.
"While there are still challenges and room for improvement, the program is heading in the right direction and we see no insurmountable obstacles to delivering the F-35 and its unprecedented 5th generation capability to our three U.S. service and international customers," he said.
BULLET PROOF?
Built by Lockheed and designed to be the next-generation fighter jet for decades to come for the U.S. Air Force, Navy and Marines, as well as key U.S. allies in Asia and Europe, the F-35 appears bullet-proofed against cancellation.
There are no other new fighter jets in the pipeline; the U.S. military's fleet of warplanes is aging; and 10 allies including Britain, Japan and Israel are deeply invested.
Manufacturing - and jobs - spread across 46 states ensure a vital layer of political protection as well.
With 10 million lines of software code onboard, and another 10 million lines in its logistics and ground systems, the F-35 is a flying computer with radars and other sensors that can see enemy threats 200 miles away in any direction.
In what was meant to be a money-saving move, U.S. officials designed the F-35 as one basic fighter (with three variants) to replace a dozen warplanes flown by the U.S. Air Force, Navy and Marine Corps, as well as U.S. allies worldwide.
The U.S. armed forces currently plan to buy 2,443 F-35s in total, comprising 1,763 A-models for the Air Force, 420 B- and C-models for the Marines, and 260 C-models for the Navy. Foreign orders are now slated to total 721.
The Marine Corps, under pressure to replace its aging fleet of Harrier AV-8B "jump jets", Boeing Co F/A-18 Hornets, and EA-6B Prowlers, is scheduled to be the first U.S. military service to use the jet, by late 2015.
Given the tight schedule and huge cost of keeping its aging current fleet flying, top Marine Corps officials are vigilant about the program and the budgetary risks it faces.
"Any delay in fielding the F-35 brings added risk to the Marine Corps' ability to execute our mission as the nation's crisis response force and it affects our ability to augment U.S. Navy carrier air wings," Lieutenant General Robert Schmidle, Deputy Commandant of Aviation, said in a statement to Reuters.
Schmidle and other planners at the Pentagon are desperate to avert the "death spiral" that gutted the Air Force's plan to buy 750 F-22 Raptor stealth fighters down to just 187 jets.
Behind closed doors, some U.S. officials fret that sequestration budget cuts could trigger a similar dynamic on the F-35, which has already seen 410 orders pushed back beyond 2017.
Depending on how the cuts are implemented, the purchase of up to nine F-35s could be deferred in fiscal 2013 alone, Navy and Air Force officials have said. That might not seem like much out of more than 3,100 destined for U.S. and foreign clients.
But initial calculations show that while cutting nine jets would save about $1.3 billion, it would also raise the cost of the remaining aircraft by nearly $800 million, said one defense official, who was not authorized to speak publicly.
The Pentagon budget analysis, which Reuters is reporting for the first time, found that postponing the 40 Navy C-model jets would raise the cost of the Navy version by about $4.5 million per plane, and add between $1.5 million to $2.6 million to the per-plane cost of the Air Force and Marine Corps versions, according to several defense officials familiar with the study.
"Cutting tails to pay bills is inefficient. Whether it's nine planes in one year, or 40 across the (future years defense plan), you're going to pay later," said one of the officials. This official and others cautioned that the studies were hypothetical for now.
Air Force Lieutenant General Christopher Bogdan, the often blunt F-35 program chief, invoked the dreaded "death spiral" this week as he pounded on the need to cut costs and keep foreign orders - which will account for half of all F-35s produced through 2017 - on track.
"The one thing that our partners care most about is how much this airplane is going to cost," he said. "If ... we want to sell the 600-plus airplanes to our partners and a couple hundred more projected to our (foreign military) customers, we better be darned sure we keep reducing the price on this airplane."
Even a two-year delay in Turkey's initial order of two jets had added $1 million to the cost of each of the remaining planes in the original order year, Bogdan told a defense conference.
No one knows exactly how much of a price tag will be too much to bear for countries like Australia and Canada, whose F-35 orders are already on shaky ground. "The tipping point will be different for each country," said one U.S. official.
In Australia, defense contractors involved in building the new jets are worried that $5.5 billion in expected orders will be in jeopardy if Canberra cuts its plans to buy 100 jets by 30 to 50 jets, as many experts expect.
Lockheed remains optimistic that international orders will hold up and even grow. South Korea is expected to choose the F-35 as the winner of a 60-jet competition to be decided this summer, and U.S. officials this week said Singapore may order more than a dozen F-35s in coming weeks.
Other allies, like Japan, see no going back on the fighter.
A senior official at Japan's Defense Ministry said it was keeping a close eye on cost and schedule risks, but there were no plans to change Tokyo's order for 42 planes: "If we don't buy until all the glitches are eliminated, it would be too late."
NAVY IS WARY
The Air Force is considering a slightly less capable version of the plane for its initial use, but the Navy is reconsidering the size of its order.
Chief of Naval Operations Admiral Jonathan Greenert this week ruled out scrapping the Navy's entire F-35C order, but said the Navy was thinking about how many jets it really needs.
Greenert last year ordered a study on equipping each aircraft carrier air wing with just one squadron of F-35s instead of two, according to defense analyst Loren Thompson. The Navy is also developing several unmanned planes, although military officials insist they will never completely replace manned fighters on carriers.
Bogdan said cutting the Navy's order too far would have serious consequences. "There is actually a 'do not go below' type of calculation, which says, if you get below the minimum production quantity on one of these variants, the price starts shooting up tremendously," he told the conference.
The Pentagon's Cost Analysis and Program Evaluation office recently forecast that the F-35's cost would rise by 9 percent if Washington only bought 1,500 jets and foreign partners stuck to their orders, according to a Government Accountability Office study, first reported by Reuters. The cost would surge 19 percent if Washington bought 1,500 jets and the partners none.
"If you cut any of these aircraft, the cost of each remaining one goes up," consultant Thompson said. "At some point soon, you're at risk of undermining the whole business case for the F-35 as an affordable new fighter."
The F-35's worsening fiscal challenges come just as advocates, and some independent analysts, say the often-troubled fighter development project is getting back on track after years of setbacks - which included two engine-related groundings this year - and expensive retrofits.
The F-35 "is now moving in the right direction after a long, expensive and arduous learning process," the GAO study concluded, although it said long-term affordability remained a big concern.
Top Pentagon officials are vowing to shelter the F-35 from the latest budget crisis, if they can.
"We'll try to protect the F-35," the Pentagon's chief weapons buyer, Frank Kendall, said this week. "There's no question about its priority.
(Additional reporting by Kiyoshi Takenaka in Tokyo and John O'Callaghan in Singapore; Editing By Warren Strobel, Claudia Parsons and Leslie Gevirtz)
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